Online pharmacies are helping to lower health costs in India

In September, the All India Organisation of Chemists and Druggists (AIOCD) held protests against the Central government’s draft proposal to formalise online sales of drugs. Despite online pharmacies contributing only 2-3% of total drug sales in India, the drugs association felt threatened enough to call for a pan-India bandh. The protests saw participation by 8.5 lakh chemists across the country.

What happened in general retail, with the entry of Flipkart, Amazon and Snapdeal, is now happening in drug retail. With lower prices and easy accessibility, online drug retail ventures are beginning to hurt physical drug stores.

Prices online are 10-20% lower than in offline. “Online players cut out so many of the costs — real estate, inventory, salaries to employees, utilities, intermediaries,” says Prashant Tandon, CEO of e-pharmacy 1mg and president of the Digital Health Platform (DHP) — formerly called India Internet Pharmacy Association — an association of eight e-pharmacies in India. The only significant costs that online players have are related to delivery.

Tandon says that in cancer, treatment costs could be between Rs 12 lakh and Rs 40 lakh. And drugs cost between 30-60% of total treatment costs, depending on whether the person undergoes surgery or not. In diabetes, asthma, and arthritis, drug costs can be 70-80% of treatment costs. “So if the drugs cost about Rs 25,000 a year, a 10-20% reduction in drug prices can result in lifelong savings for the patient,” Tandon says. For cancer patients, price savings could be as much as Rs 75,000 - Rs 3 lakh, he estimates.

Online also provides convenience. “For the elderly and sick, an online delivery model is crucial as they might have serious mobility issues,” says Dharmil Sheth, CEO of epharmacy PharmEasy.

Sheth also notes that for an offline retailer, it does not make sense to stock up on expensive drugs for rare diseases and genetic conditions because the likelihood of getting a customer from the locality is low. In most such cases, doctors prescribing these drugs give patients the manufacturer’s direct number. Online players do not have this constraint because their market is almost the entire country.

Online players supply to more than 22,000 pincodes in India, including the Andaman and Nicobar islands and Lakshadweep. They use India Post, and other delivery partners used by the likes of Flipkart and Amazon, to make the deliveries. “This has led to a drastic reduction in the time taken for delivery (to remote areas). E-pharmacies are now able to deliver on the same day or within 4-5 days,” says Pradeep Dadha, CEO of epharmacy Netmeds.

But can delivery costs offset the online advantage, given that these costs are rising with the emergence of numerous delivery ventures? “Cancer drugs normally cost between Rs 15,000 and Rs 3 lakh. So a charge of Rs 50-70 for delivery is something patients are unlikely to crib about,” says Tandon.

Online players also say that their model can lead to better disease management and increase adherence to prescribed treatment plans. “Your neighbourhood store owner can’t keep calling a dozen people everyday to remind them about their insulin shots. But we can non-intrusively send out reminders to stock-up drugs or re-fill injection doses. Globally, studies have shown that digital healthcare models can drive adherence,” says Tandon. Their mobile apps also offer free diet counselling and digital retrieval of prescriptions.The digital trails in online are also providing greater confidence to stakeholders. Many of the bigger general insurance companies, like Max BUPA and Apollo Munich Health Insurance, have started partnering with e-pharmacies for their OPD (outpatient department) covers because of the e-billing and tracking facilities they offer.

“Traceability and auditability will help law enforcement, government regulation and insurance coverage of drugs,” say online players. Tandon says offline is more susceptible to manipulation and fraud. “Punjab today has an opioid crisis only because of lack of law enforcement in the offline space,” says Tandon.

But none of this is likely to immediately take away the relevance of offline druggists. In many cases, you need the drugs immediately, unlike a smartphone or a pair of jeans. That’s not something online can do. “We can’t replace what offline is doing. The arrival of Amazon and Flipkart didn’t see the extinction of offline stores. It’s the same with us,” says Netmeds’ Dadha.

The online association DHP has also decided to avoid sale of habit-forming narcotic, psychotropic drugs and painkillers. “As a selfregulated body, we have decided to not sell schedule X drugs,” says Rajiv Gulati, general secretary of DHP and founder of e-pharmacy mChemist. DHP will focus on cardiovascular diseases, cancer, hypertension, diabetes, asthma, arthritis or conditions of the central nervous system. The objective is to meet the need for drugs for chronic conditions.

“I see no reason for offline retailers to feel threatened. We form such a minuscule portion of drug sales that we can play a complementary role. We are looking at making drugs more accessible. After all, it may not be profitable to set up brick-and-mortar stores in tier-3 cities or remote villages and towns,” says Gulati.